Transportation Financial Sustainability

To reduce greenhouse gas emissions and address California’s sizeable infrastructure needs, California will need to restructure the way it finances transportation. The need to maintain, improve and operate roads, highways, and transit systems continues to grow while our resources to address these needs dwindle.

At the federal level, transportation policy and funding is set by a transportation authorization bill. After months of intense negotiations and years of active advocacy by the Silicon Valley Leadership Group and many other partners, on June 29th Congress finally approved and the President signed Moving Ahead for Progress in the 21st Century (MAP-21), a long-term surface transportation funding bill. The last transportation bill passed by Congress expired in 2009, and would have had to been extended for a 10th time if lawmakers had failed to reach an agreement, as transportation funding was scheduled to run out on June 30th.

The highway bill package represents true compromise – which is both good and bad for Leadership Group priorities. Most notably, House Republicans dropped demands for language expediting the authorization of the Keystone XL oil sands pipeline and loosening regulations on coal ash. In return, they won concessions from Democrats to streamline permitting of transportation projects and dedicated funding for bike/pedestrian improvements. Overall, the legislation is a win, particularly given the current political environment, as it maintains transportation funding at current levels through the end of fiscal 2014.

In the long term, the United States needs to start thinking about new ways to fund our transportation system and encourage people to reduce solo-driving. Potential ideas include:

  • Reduce the voting threshold from 67% to 55% for transportation projects throughout California.
  • Increase the Gas Tax, which was last raised in 1990 and has lost 1/3 of its value to inflation since then. This would also discourage solo driving. But it would not resolve the conflict between greater fuel efficiency and shrinking revenues.
  • Adopt Distance-Based Fees based on vehicle fuel efficiency and distance traveled. Europe has applied such fees to freight trucks with enormous success, significantly reducing emissions and miles driven without reducing the volume of goods transported.
  • Institute Congestion Pricing or User Fees, varying the fee in relation to demand. For example, tolls priced higher during peak commute hours can encourage those who can to shift their time of travel to non-peak hours. This distributes demand across other time periods when there is more roadway capacity. The rate can be set so that it is revenue neutral or generates excess funds.
  • Adopt Feebates—a combination of fees and rebates—to encourage the manufacture and purchase of cleaner, more fuel efficient vehicles. Consumers purchase the vehicle of their choice, but receive a rebate or pay a surcharge if their selection is above or below a certain standard of performance. The program can be designed so that it is revenue neutral or generates a positive cash flow.
  • Enable greater use of public private partnerships to ensure that scarce public resources go farther.
  • Streamline transit operations and the development of transportation capital projects.